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Dialysis company settles lawsuit for $32M

July 11--BEVERLY -- A Beverly company has agreed to pay $32 million to settle a lawsuit accusing the company of a fraudulent scheme to profit from the treatment of kidney dialysis patients.

The agreement, announced Monday, ends a two-year legal battle between American Renal Associates, one of Beverly's largest employers, and UnitedHealth Group, the country's largest health insurer.

UnitedHealth filed a lawsuit in July 2016 claiming that American Renal convinced kidney dialysis patients in Florida and Ohio to switch to commercial health insurance plans, even though their dialysis treatments were already covered by Medicare or Medicaid.

Commercial insurance reimburses companies as much as $4,000 for out-of-network treatments, significantly higher than the $200 to $300 paid by Medicare or Medicaid for the same treatments, the lawsuit said.

At the time, American Renal Associates released a statement saying the suit was "without merit," and that it intended to "vigorously defend" itself in the lawsuit.

As part of the settlement, the two companies entered into a three-year agreement to provide patients with UnitedHealth insurance with "more cost-effective, in-network" access to all of American Renal's dialysis clinics.

American Renal Associates operates 228 dialysis clinics in 26 states and treats about 15,700 patients with end-stage kidney disease each year. It is located at Cummings Center and employs about 400 people in Beverly, 700 in Massachusetts and 4,000 across the United States.

Officials from American Renal declined to comment on the settlement. The two companies released a joint statement saying they were pleased with the resolution and "look forward to building a more cooperative relationship that enables us to collaborate on high-quality care for dialysis patients." American Renal did not admit to any wrongdoing as part of the settlement.

5 years to pay

According to a filing with the Securities and Exchange Commission, American Renal will pay UnitedHealth Group$32 million in five installments over five years, beginning with a $10 million payment on Aug. 1.

The agreement marks the second time American Renal has settled a lawsuit over the alleged insurance scheme. In February, the company agreed to settle a shareholder class-action lawsuit for $4 million. That suit said the alleged fraud caused shares in the company to plummet.

According to the United HealthCare lawsuit, American Renal persuaded patients to switch to commercial insurance by agreeing to pay their co-pays and deductibles. The company would also connect patients with the American Kidney Fund, which would pay the patients' private insurance premiums. The suit alleged the scheme violated anti-kickback laws because the American Kidney Fund's premium assistance program was funded by earmarked donations from American Renal Associates.

The UnitedHealth lawsuit also said American Renal intentionally failed to tell patients that the foundation's premium assistance program was only available for patients receiving dialysis. If the patients sought to cure their condition through a kidney transplant, they would be ineligible for premium assistance, the lawsuit said.

Patients also risked being stuck with the co-pays and deductibles because there was no guarantee that doctors and other providers would go along with the scheme, the lawsuit said.

In January 2017, American Renal reported in an SEC filing that it had received a subpoena from the U.S. Department of Justice requesting information related to its interactions with the American Kidney Fund.